Biodiesel not always profitable

Biodiesel not always profitable

By Kyle Stock

The wonder-fuel called biodiesel is no longer cheap

The demand for environmentally friendly fuel and the oils that are used to make it has surged in step with the cost of crude oil and conventional gas. Much of the biodiesel now produced in South Carolina — championed for reducing U.S. reliance on foreign oil — is now shipped to Europe, where stronger currencies have more buying power and suppliers are willing to meet higher prices.

Southeast BioDiesel LLC has been cranking out the fuel for almost a year now on the old Navy base in North Charleston, chemically treating chicken fat until it can power a Mercedes. Though the factory is pumping out 18,000 gallons of biodiesel every day — 360,000 gallons a month — the plant is surviving on tiny profit margins, according to cofounder Dean Schmelter.

"The chicken guys have figured out the exact point where we stop making a profit and that's where they keep it," Schmelter said. "We're not making money, but we're not losing it either."

Every week about 1,000 gallons of Schmelter's fuel is poured into cars just down the road at the Fox Music store, where OM Fuels LLC has set up the only retail biodiesel pump in the area. The cost last week: $4.12 per gallon, roughly the same as a gallon of conventional diesel.

OM Fuels said it isn't making money on biodiesel either. Chief Executive Charles Robert Adams said the green fuel is now tightly tied to commodities markets, where restless traders push prices through volatile swings and surges.

"It's just gambling," Adams said. "They don't add one iota of value to the product going to the public."

The so-called silver bullets of the biodiesel industry — fast growing fuel sources like algae and rapeseed plants — are still at least a few years from being grown and harvested en masse.